US job growth likely to rebound in October

US job growth likely rebounded in October, with wages expected to have recorded their largest annual gain in 9-1/2 years, pointing to further labour market tightening that could encourage the Federal Reserve to raise interest rates again in December.

The Labour Department’s closely watched monthly employment report on Friday is also expected to show the unemployment rate steady at a 49-year low of 3.7 per cent.

Nonfarm payrolls probably increased by 190,000 jobs last month, according to a Reuters survey of economists.

Payrolls rose by 134,000 jobs in September, the smallest gain in a year, after Hurricane Florence drenched North and South Carolina, weighing on restaurant and retail employment.

But the anticipated bounce back in job growth is likely to be tempered some what by Hurricane Michael, which struck the Florida Panhandle in mid-October.

“The employment report should help calm some concerns that the economy is slowing more quickly than it really is, the economy is really in good shape,” said Ryan Sweet, a senior economist at Moody’s Analytics in Westchester, Pennsylvania.

Average hourly earnings are forecast rising 0.2 per cent in October after advancing 0.3 per cent in September. This would boost the annual increase in the wages to 3.1 per cent, the biggest gain since April 2009, from 2.8 per cent in September.

Strong annual wage growth would mirror other data published this week showing wages and salaries rising in the third quarter by the most since mid-2008. Hourly compensation also increased at a brisk pace in the third quarter.

Firming wages support views that inflation will hover around the Fed’s 2.0 per cent target for a while. The personal consumption expenditures price index excluding the volatile food and energy components has increased 2.0 per cent for five straight months.

The Fed is not expected to raise rates at its meeting next Wednesday, but economists believe strong labour market data could see the US central bank signal an increase in December. The Fed raised borrowing costs in September for the third time this year.

Employers, scrambling to find qualified workers, are boosting wages. There are a record 7.14 million open jobs.

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